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Target crushes estimates as retailer uses new shopper habits to gain market share

Target on Wednesday reported fiscal third-quarter earnings that easily outpaced analysts’ estimates as the discount retailer won market share by turning shoppers’ pandemic habits into lasting gains.

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Target on Wednesday reported fiscal third-quarter earnings that easily outpaced analysts’ estimates as the discount retailer won market share by turning shoppers’ pandemic habits into lasting gains.

The company said it grabbed market share across all of its core categories, from apparel to beauty. Year to date, it said it has won $6 billion in market share, with $1 billion in share gains coming during the latest quarter. It has measured the gains with third-party and internal research.

Buoyed by this strength, sales online and at stores open at least a year rose 20.7% during the third quarter. Comparable digital sales grew by 155%, while same-store store sales climbed 9.9%.

Target shares closed Wednesday up 2.34% to $166.85. Its stock has gained about 30% so far this year, bringing Target’s market value to $83.5 billion. Shares touched an all-time high of $172.12 earlier on Wednesday.

Despite the strong results, Target declined to provide an outlook. It withdrew its forecast during the first quarter as the coronavirus made predicting shopping habits more difficult.

Here’s how the company did in the fiscal third quarter ended Oct. 31:

  • Earnings per share: $2.79, adjusted vs. $1.60 expected by a consensus of analysts surveyed by Refinitiv
  • Revenue: $22.63 billion vs. $20.93 billion expected by Refinitiv
  • Same-store sales: up 20.7% vs. 11.2% expected by StreetAccount estimates

Target said its third-quarter net income rose to $1.01 billion, or $2.01 per share, from $714 million, or $1.39 per share, a year earlier. Excluding items, Target earned $2.79 per share, considerably more than the $1.60 per share expected by analysts.

Total revenue grew 21% to $22.63 billion from $18.67 billion last year, besting analysts’ expectations of $20.93 billion.

More frequent trips

While some retail rivals had to shutter in the early months of the pandemic, Target’s nearly 1,900 stores remained open as an essential retailer that could sell a wide range of goods, from gallons of milk to pajamas and laptops. In recent months, even as shopping mall competitors have opened again, Target said it has held on to customers and won more of their wallets.

Customers shopped more frequently with Target in the third quarter, and when they did, they put more in their baskets, the company said. Combined transactions in Target stores and on its website were up 4.5% year over year, while the average ticket grew 15.6% in the quarter.

Sales in all of Target’s merchandise categories were higher in the third quarter than a year earlier. Electronics shot up by more than 50%. Home items rose by a mid-20s percentage rate. Apparel increased by nearly 10%. And the two other categories, essentials & beauty and food & beverage, grew in the high teens.

Plans to grow beauty, apparel

Target is making long-term plays to pick up business from struggling department stores and hard-hit mall staples. The company announced last week that it will open smaller versions of Ulta Beauty shops inside of hundreds of its stores with a curated assortment of products, from hair care and perfume to lip gloss. More than 100 of the shops are expected to open next year.

CEO Brian Cornell said on a call with reporters that apparel has been a bright spot and Target is planning to lean into it. Along with loungewear, sleepwear and intimates, he said kids’ and men’s clothing performed well during the three-month period.

“Apparel has been one of our strengths, [and] certainly from a market share standpoint, one of the real highlights for our business throughout the quarter, and we certainly see that continuing as we finish up the year,” he said.

Target measures market share gains using its third-party and internal research. It wouldn’t be more specific about methodology.

The big-box retailer’s online options have remained popular. Its curbside pickup service, Drive Up, increased more than 500%. Target’s home delivery service Shipt grew nearly 280%. And Order Pickup, an in-store option that allows customers to retrieve online purchases in person, climbed more than 50%.

The pandemic, however, changed the rhythm of sales and the purchases that customers made, Cornell said. Since many schools and colleges began the year with remote learning, Target kept merchandise on the shelves and customers did back-to-school shopping later, he said. Those purchases drove cost growth in the mid-20% range in September, he said.

Many hours at home have translated to “outsized growth in electronics,” he said, such as purchases of computer software, video games, portable electronics and office equipment. And shoppers bought more than usual in the home category as they replaced decor and bought kitchen supplies.

Holiday buying began early

As the pandemic continues amid the holiday season, Target kicked off sales early and has tried to differentiate on safety and convenience. The company said last month it would devote twice as many parking spots to curbside pickup. It also added features to help shoppers during the typically busy time, such as a website tool they can use to check if there’s a line outside of their store and if so, reserve a spot ahead of their visit.

Cornell said customers have begun buying presents already, “but they still have a very long shopping list that they have to fulfill over the next few weeks.”

“We expect them to be decorating their homes,” he said. “We expect a lot of gift giving as many families will be shipping gifts across the country and be celebrating very differently than they had in the past.”

He added, “this is a holiday season when the guest is going to try to find that little bit of joy.”

Target shares closed Wednesday up 2.34% to $166.85. Its stock has gained about 30% so far this year, bringing Target’s market value to $83.5 billion. Shares touched an all-time high of $172.12 earlier on Wednesday.

Source: https://www.cnbc.com/2020/11/18/target-tgt-q3-2020-earnings.html

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Airbnb says first-quarter revenue rose 5% as vacationers return to travel

Airbnb’s net loss tripled, but the company expects its adjusted margin to improve in the second half of the year as travel restrictions ease up.

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Airbnb CEO Brian Chesky attends the Cannes Lions on June 20, 2016, in Cannes, France.

Richard Bord | Getty Images

Airbnb said revenue increased 5% in the first quarter, beating analysts’ estimates, as the rapid pace of vaccinations led to more travel. The company’s net loss tripled because of debt repayments and restructuring costs.

Here’s how the company did:

  • Earnings: Loss of $1.95 per share
  • Revenue: $886.9 million, vs. $714.4 million as expected by analysts, according to Refinitiv.

The increase in year-over-year revenue followed a 22% decline in the fourth quarter.

The coronavirus pandemic considerably curtailed rental activity on Airbnb, but the business appears to be recovering as vaccines becomes more widely available and governments lift travel restrictions. The company reported 64.4 million nights and experiences booked, up 39% from the fourth quarter and up 13% year over year. Analysts polled by FactSet had expected 62.5 million nights and experiences booked.

Booking nights dropped in every quarter last year compared with the same period in 2019.

Gross booking value, Airbnb’s way of tracking host earnings, service fees, cleaning fees and taxes, totaled $10.3 billion, up 52% year over year and above the $7.87 billion FactSet consensus.

Airbnb’s net loss tripled as it repaid debt for loans it took out early in the pandemic, and as the company continued to pay restructuring fees following layoffs. It also had a $113 million impairment related to office space in San Francisco.

Its average daily rate rose 25% from the prior quarter to $160, reflecting an increase in the amount customers are spending for homes and experiences. Airbnb pointed to strength in bookings in North America, along with complete homes and locations outside cities, all of which tend to bring higher rates. The company said 24% of nights booked came from stays of at least 28 days, compared with 14% in 2019.

“The two trends I do think are going to invert are we are going to see a recovery of urban travel and a recovery of cross border,” Airbnb CEO Brian Chesky said on a conference call with analysts. “This has been our bread and butter before the pandemic, and I think those are significant tailwinds for us.”

Chesky talked about the potential to offer deals to travelers who can be flexible about when they travel.

“There’s a lot of other opportunities for us, I think, to point demand to where we have available supply, which will allow us to steadily increase occupancy,” he said.

Cancellation rates are now considerably lower than in 2020 but remain higher than they were in 2019, said Dave Stephenson, the company’s finance chief.

The company issued general commentary on the quarters ahead, saying that in the second quarter its adjusted earnings margin before interest, taxes, depreciation and amortization could break even or be slightly positive. That margin was -7% in the first quarter, and it should be higher in the second half of the year than the first half, Airbnb said in a letter to shareholders.

“We expect revenue in Q2 2021 to be significantly higher than that of Q2 2020, given the impact of Covid- 19 on the prior year period, and to be at a similar level to that of Q2 2019,” the company said. “In Q2 2021, we expect the positive momentum of recovery experienced in Q1 2021 to be partially offset by the continued uncertainty of travel restrictions and lockdowns in EMEA.”

The company said it’s too soon to say whether the recovery in the first half of the year will keep the same pace in the second half.

“Although we have seen booking lead times start to lengthen when compared with Q4 2020, we continue to have limited visibility for growth trends in the second half of 2021,” Airbnb said. “With the increased availability of vaccines and the easing of some travel restrictions, there has been greater willingness by guests to search for and book travel later in the year. Offsetting this is the difficulty in predicting factors such as future Covid-19 outbreaks or travel restrictions globally, which impact the actual rate at which guests complete their stays (at which point we recognize revenue).”

Airbnb reported financials for the second time as a public company, having completed its IPO in December. Airbnb shares have fallen about 8% since the start of 2021, while the S&P 500 is up about 10% over the same period.

WATCH: Airbnb CEO on the campaign to attract more hosts as demand surges

  • Earnings: Loss of $1.95 per share
  • Revenue: $886.9 million, vs. $714.4 million as expected by analysts, according to Refinitiv.

Source: https://www.cnbc.com/2021/05/13/airbnb-abnb-earnings-q1-2021.html

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Disney misses on subscriber expectations, parks revenue still hurt by Covid restrictions

Disney+ had been bolstering the company’s success as it was losing out on business from Covid restrictions, but it seems the rapid growth is starting to slow.

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In this handout photo provided by Walt Disney World Resort, guests stop to take a selfie at Magic Kingdom Park at Walt Disney World Resort on July 11, 2020 in Lake Buena Vista, Florida.

Matt Stroshane | Walt Disney World Resort | Getty Images

Disney reported second quarter results Thursday, posting lower-than-expected revenue and subscriber counts for its streaming service.

The company’s stock dipped around 3.5% in after-hours trading.

  • Earnings per share: 79 cents vs 27 cents expected in a Refinitiv survey of analysts
  • Revenue: $15.61 billion vs $15.87 billion expected in the survey

Streaming

The company missed on subscriber estimates for Disney+, coming in at 103.6 million paid subscribers. It was expected to post 109 million, according to FactSet.

The streaming service had been bolstering the company’s success as it was losing out on business from Covid restrictions, but it seems the rapid growth is starting to slow. Still, the company reiterated its plans to see between 230 million to 260 million subscribers to Disney+ by 2024.

“This quarter’s numbers were exactly as we projected internally, so no disappointment here,” CEO Bob Chapek told CNBC’s Julia Boorstin.

Average monthly revenue per user dipped 29% year over year to $3.99, which the company attributed to the launch of Disney+ Hotstar. The service has lower average monthly revenue per paid subscriber than traditional Disney+ in other markets, pulling down the overall average for the quarter.

Disney CFO Christine McCarthy said on the company’s earnings call that excluding Hotstar, average revenue per paid Disney+ subscriber would have been $5.61 in the quarter.

Average monthly revenue per paid subscriber grew slightly for Disney’s other direct-to-consumer platforms, ESPN+ and Hulu.

The company said it now has around 159 million total subscribers across its streaming services as of the end of the second quarter. Revenue for Disney’s direct-to-consumer business grew 59% to $4 billion, which has helped offset losses in other segments affected by the pandemic.

Disney announced it is also extending its MLB contract through 2028 and that it signed an eight-year soccer deal with LaLiga.

Parks

Revenue at Disney’s parks, experiences and products segment fell 44% to $3.2 billion, as many of its theme parks were either closed or operating at reduced capacity and its cruise ships and guided tours were suspended.

The company said the outbreak cost this division around $1.2 billion in lost operating income during the latest quarter.

Disney recorded a one-time $414 million charge during the quarter for impairments and severance for the planned closure of an animation studio and Disney-branded retail stores, and severance paid to workers at its parks and and resorts businesses.

Disney reopened its two California-based parks on April 30, so any revenue garnered over the last few weeks is not reflected in the fiscal second-quarter results. However, the parks’ reopening could boost expectations for the fiscal third quarter.

“We are very encouraged by the initial guest response,” McCarthy said, adding that forward-looking bookings are strong as coronavirus case counts decline and vaccines ramp up.

Additionally, the Centers for Disease Control and Prevention said earlier Thursday fully vaccinated people no longer need to wear a face mask or stay six feet away from others in most settings, whether outdoors or indoors. Chapek pointed toward the new guidance as good news for the company, saying in the earnings call it will be a bigger catalyst for growth and attendance.

“I think in relatively short order you’re going to see our attendance go up significantly,” Chapek later told CNBC.

As of Thursday, Disney’s Paris-based theme park is the only location that has not reopened to the public.

Content sales and licensing revenues fell 36% for the quarter to $1.9 billion. The award-winning “Nomadland” was Disney’s only theatrical release in the U.S. over the quarter (it debuted simultaneously on Hulu). “Raya and the Last Dragon,” Disney’s latest animated feature, also debuted in some theaters internationally. It was made available on Disney+ Premier Access for $30.

Several Marvel titles are on the horizon, such as “Black Widow,” “Eternals,” “Shang-Chi and the Ten Rings,” and “Spider-Man: No Way Home” as well as “Cruella,” “Jungle Cruise,” “Free Guy,” “Encanto” and “West Side Story.”

The company said that “Shang-Chi and the Ten Rings” and “Free Guy” will be released first in theaters, with an exclusive 45-day window. Disney said earlier Thursday its blockbuster film “Jungle Cruise” will debut in theaters and on Disney+ Premier Access on July 30.

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Source: https://www.cnbc.com/2021/05/13/disney-dis-q2-2021-earnings.html

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As much as $365 billion wiped off cryptocurrency market after Tesla stops car purchases with bitcoin

Tesla CEO Elon Musk said Tesla would suspend car purchases using bitcoin, wiping off billions of dollars of value from the cryptocurrency market.

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Artur Widak | NurPhoto | Getty Images

GUANGZHOU, China — Hundreds of billions of dollars were wiped off the entire cryptocurrency market after Tesla CEO Elon Musk tweeted that the electric vehicle maker would suspend car purchases using bitcoin.

At around 6:06 a.m. Singapore time on Thursday when Musk made the announcement, the value of the whole cryptocurrency market stood at around $2.43 trillion, according to data from Coinmarketcap.com.

Around 8:45 a.m., the market capitalization had dropped to around $2.06 trillion, wiping off around $365.85 billion. The market has pared some losses. Since Musk’s tweet, the cryptocurrency market had seen $165.75 billion wiped off its value at around 9:22 a.m. Singapore time.

In February, Tesla announced in a regulatory filing that it had purchased $1.5 billion worth of bitcoin and planned to accept the cryptocurrency for payments.

Musk cited environmental concerns on Thursday and said Tesla is “concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”

Bitcoin is not issued by a single entity like a central bank. Instead, it is maintained by a network of so-called “miners.” These miners use purpose-built computers that require a lot of energy to solve complex mathematical puzzles in order for bitcoin transactions to go through. Bitcoin’s energy consumption is larger than some individual countries.

At around 9:34 a.m. Singapore time, bitcoin was down over 12%, dipping below the $50,000 mark for the first time since Apr. 24, according to CoinDesk data. Despite the recent pullback, bitcoin is still up over 400% in the last 12 months.

Other cryptocurrencies ether and XRP were also sharply lower.

Musk has been a big proponent of digital currencies including bitcoin and dogecoin, helping to drive their prices higher in recent months.

The Tesla CEO said the company will not be selling any bitcoin and intends to use it for transactions “as soon as mining transitions to more sustainable energy.”

Bitcoin has garnered interest in the last year as companies such as Square and Tesla announced bitcoin purchases and large institutional investors entered the cryptocurrency space. Major investment banks like Goldman Sachs and Morgan Stanley have also sought ways to allow their wealthy clients to get bitcoin exposure.

Around 8:45 a.m., the market capitalization had dropped to around $2.06 trillion, wiping off around $365.85 billion. The market has pared some losses. Since Musk’s tweet, the cryptocurrency market had seen $165.75 billion wiped off its value at around 9:22 a.m. Singapore time.

Source: https://www.cnbc.com/2021/05/13/bitcoin-btc-price-falls-after-tesla-stops-car-purchases-with-crypto.html

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